Government Bytes


The States Can't Afford ObamaCare

by john stephenson / /

Today’s Wall Street Journal (subscription required) features an interesting op-ed by George Melloan, a former columnist and deputy editor of the editorial page. In it, Melloan argues that one of the economic realities behind the lawsuit by 26 states against the Obama administration’s health care “reform” law is that the states simply cannot afford it.


Melloan explains: “Thanks to the recession and their own spending excesses, nearly all states are suffering budget shortfalls, some to the point where there is no clear idea where the money will come from to meet pension and bond obligations, let alone operating expenses. The prospect of adding a further huge burden down the line, even with Washington kicking in over half the cost, is appalling.”


“The 26 states party to the Florida suit were saying, in essence: enough! Washington can borrow from the Chinese or call on the Federal Reserve to buy its bonds. But states' only recourse in a budgetary bind is further painful cuts in services.”


For his part, Judge Vinson, the Florida judge who ruled Obamacare is an unconstitutional exercise of Congress’ power, did not agree with the economic argument that costs should be a consideration. Instead, Vinson sided with the government lawyers who argued that since states are free to withdraw from Medicaid if they so choose, nobody is forcing them to do anything.


But as Melloan points out, “Judge Vinson's ruling [notwithstanding], there is considerable practical merit in the states' position. For one thing, federal taxes levied on the incomes of citizens in states that withdrew would simply go to support Medicaid elsewhere. These citizens would not only get nothing in return for their taxes—they would also be stuck with the cost of alternative ways to provide health care for the poor.”


Given the states’ fiscal positions in the year ahead and the dire choices they face, the argument that Obamacare – and other federal mandates – cost too much could take more precedence in the months ahead. Moreover, more states could also challenge other onerous federal mandates as more costly examples of federal overreach.